Stock market saying pigs get slaughtered
Many people are intimidated by the business news because they don't understand the vernacular. What does this have to do with money? But there's good news: Wall Street language isn't only for business elites with advanced degrees from Ivy League schools.
In fact, you may be surprised to find out that most Wall Street lingo is neither sophisticated nor esoteric. Yes, the truth is that investment bankers and brokers typically use words you probably mastered in kindergarten. Let's take a look at these barnyard words from a financier's perspective - you'll be fluent in no time.
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A Dog With Fleas Depending on your movie knowledge, you may remember this classic line in the movie "Wall Street": A dog is an underperforming stock or asset. Most Wall Street investors think of "dog" as a four-letter word, but a few are attracted to the dogs of the market. An investment philosophy called the dogs of the Dow theory advocates purchasing the most beaten-down stocks in the Dow Jones Industrial Average DJIA each year.
For more, read Barking Up The Dogs Of The Dow Tree. Bear The term bear refers to the given market conditions. Bull and bear are probably the most familiar terms on. Bear markets are rife with pessimism and negative sentiment.
Probably the most famous bear markets occurred in , which some believe caused the Great Depression. Unfortunately, economic indicators in have drawn comparisons to the Great Depression of The severe housing and credit bubbles originating in the first decade of the new millennium in the United States burst abruptly in , and this credit unwinding, or "deleveraging" had a negative ripple effect on economies and markets worldwide.
Venerable institutions, such as Bear Sterns and Lehman Brothers were wiped out by this bear market. Stock markets across the globe also experienced severe downturns. Governments engineered financial rescue packages for many large banks and insurance giants to avoid global financial markets meltdowns.
For more insight, see Where did the bull and bear market get their names? While there is no clear-cut strategy for investors in terms of surviving a bear market, many financial advisors suggest that bear markets occur as part of the normal economic and business cycle.
For longer-term investors, these bear markets could be viewed as buying opportunities. Other advisors may recommend selling stocks and raising cash until a clear direction or bottom of the market begins to appear. To learn more, read Adapt To A Bear Market.
Bull The term bull refers to a very positive stock market environment in which stock prices are increasing and money is flowing into stocks. Investor confidence is high in bull markets. During the s and through early , the U. Perhaps the poster child for the technology bull market of the s was Cisco Systems Nasdaq: Bull markets can be very powerful creators of wealth for the average investor as well as Wall Street gurus.
For related reading about stock returns during bull markets, see The All Equities Portfolio Fallacy. Ostrich An ostrich is an investor who fails to react to critical situations or events that are likely to impact his or her investment.
For example, if the Securities and Exchange Commission SEC is launching an investigation into a company, an action that could be detrimental to the company's stock price, the ostrich will simply ignore this news.
The ostrich effect is one in which investors bury their heads in the sand, hoping for better days ahead. Ostriches appear or disappear most frequently during bear markets, when people tend to experience the most financial stress.
To learn more, see Ostrich Approach To Investing A Bird-Brained Idea. Pig A pig is any investor who puts greed ahead of his or her investment principles or sound strategies.
Anyone who watches investment guru Jim Cramer knows one of his most famous expressions: As a result, the pig may then go and borrow money on margin or mortgage his or her home to buy more of a stock at a higher price with the hope of making more money on the investment.
The pig can get slaughtered if the stock drops and all the original gains are lost. Smart investors are disciplined investors.
Professional investors know when to take profits as well as when to cut their losses. Their primary concern is the preservation of capital and not necessarily hitting a home run every time they step up to the plate.
Sheep A sheep is an investor who has no strategy or focus in mind. This type of person simply listens to others for financial advice, and often misses out on the most meaningful moves in the market as a result. For example, sheep investors who had a philosophy of only buying value stocks in the s missed one of the greatest bull markets of our time. In other words, a sheep can be eaten by a bull or bear if he or she isn't in the right place in the market. For more insight, read Trading Systems: Run With The Herd Or Be A Lone Wolf?
Conclusion Don't assume that you can't learn trader-talk or Wall-Street-speak just because you don't work there. In fact, picking up the lingo may be more of an exercise of your animal knowledge instead of your investment savvy. Learning these terms can help you gain some insight into the world of words on Wall Street. Surprisingly, you'll find that they aren't different much from the words heard on.
Dictionary Term Of The Day. A measure of what it costs an investment company to operate a mutual fund.
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The Wall Street Animal Farm: Getting To Know The Lingo By Stephan Abraham Share. Bull and bear are probably the most familiar terms on Main Street. Surprisingly, you'll find that they aren't different much from the words heard on Main Street - or in kindergarten classrooms across America.
Even if the market is in a decline your portfolio doesn't have to be. Stay calm, play dead and keep your eyes open for attractive valuations.
The Wall Street Animal Farm: Getting To Know The Lingo
Prepare to survive, and even prosper, in the impending bear market, by considering and putting into action the following four strategies. Learn how your portfolio should evolve to suit bear market conditions. Take advantage of the next bear market and watch your investment in great companies grow. It has been almost six years since the last bear market, so it might be time for advisors to start preparing their clients for the inevitable downturn. There are many ways to profit in both bear and bull markets.
The key to success is using the tools for each market to their full advantage. Elder-ray helps determine the strength of competing groups of bulls and bears so you know when to buy and when to short. How can a trader use the Elder-Ray oscillator as the second screen of this system?
The terms bull and bear are used to describe general actions and attitudes, or sentiment, either of an individual bear and A bull market is represented by a rising price trend, and a bear market is indicated by a falling price trend. Learn why investing in a tumultuous market can be challenging even for the most experienced investors.
The Dow Jones Industrial Average DJIA is an index of 30 of the most significant, mature and respected companies in the Read about the important buying and selling conditions that are recommended by Dr.
Alexander Elder when using his Elder-Ray An expense ratio is determined through an annual A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. A period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all A legal agreement created by the courts between two parties who did not have a previous obligation to each other. A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation.
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